What is the issuance price of Tether (USDT)?
- William ShakespeareOriginal
- 2024-10-12 17:50:31307browse
Issuance price of Tether (USDT)
Tether (USDT) is a stablecoin pegged to the US dollar, owned by Tether Corporation issued. Its offering price is $1. This means that when USDT was first issued, you could exchange 1 USD for 1 USDT.
Why is Tether issued at $1?
USDT is intended to be a stable currency pegged to the value of a fiat currency such as the US dollar. To achieve this, the issuance price of USDT is set at $1. This helps ensure that USDT maintains a stable exchange rate with the U.S. dollar.
How does Tether maintain its value of $1?
Tether Corporation maintains USDT’s value of $1 via:
- Fiat currency reserves: Tether claims it holds more USDT in circulation The total amount of legal currency reserves. This reserve can be used as an asset to back the value of USDT.
- Arbitrage Trade: When the value of USDT deviates from $1, arbitrage traders place trades to restore the peg. This involves buying USDT at a discount from an exchange and then redeeming it for $1 on Tether’s website.
- Market Demand: Demand for USDT also helps maintain its value of $1. When demand increases, the price of USDT increases, and when demand decreases, the price of USDT decreases.
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